Jean-François Fagnart

Energy, Complexity and Sustainable Long-Term Growth

We introduce the concept of product complexity in an endogenous growth model with renewable energy and expanding product variety a la Grossman and Helpman (1991). We describe the complexity of a product as an increasing function of the variety of inputs it consists of. Considering that energy is necessary to all human activities (including research), we highlight what type of long run growth path is possible according to (a) the potential of energy efficiency gains in the various human activities and (b) the effect of the product complexity on the energy intensiveness of its production process. In a finite world, a neoclassical growth path where economic growth can be both quantitative and non-quantitative (i.e. takes the form of an increase in the quantity of produced goods and in the product variety) is only possible if the potential of energy efficiency gains is unbounded in all human activities. If the energy intensiveness of the final production is bounded from below by a strictly positive constant, quantitative growth is not possible in the long run but non-quantitative growth may persist if (i) the impact of product complexity on the energy intensiveness of production is null or weak enough and (ii) the energy intensiveness of research activities tends to zero. If these conditions are not met, no form of long run growth is possible.

investment and technological choice in a right-to-manage model

We analyze the interactions between investment and local wage bargaining in a putty-clay model where the investment decision commits the firm to a particular capital intensity. This technological precommitment is used strategically in order to manipulate the bargaining outcome. We show that this strategic behavior induces a nonmonotonic relationship between the capital and labor demands of the firm and most of its environmental parameters (e.g., the bargaining power of the union, its minimum wage requirement, the capital cost). The results we obtain in our putty-clay framework thus contradict several conclusions of the standard literature on wage bargaining and investment.

Strong Sustainability, Rent and Value-Added Sharing

We reassess Ricardos conjecture of a secular increase in rent in an endogenous growth model with an essential renewable material resource and rising product quality. The model is consistent with the concept of strong sustainability and thus assumes that the resource productivity is bounded. Hence, only qualitative growth (i.e., a secular increase in the quality of final productions) may persist in the long run. We analyse how the scarcity of the resource affects the rent level and the distribution of national income (between resource, capital and labour) in the short and long runs. In the long run, resource scarcity induces a distributive conflict opposing labour to capital and resource, a lower resource stock implying generally a lower labour share and higher capital and rent shares. The transitory dynamics of the economy is analyzed numerically, starting from initial conditions characterized by a low capital stock and a large potential technical progress. Even if initially the rent share may evolve non-monotonically, simulations tend to confirm that Ricardos conjecture emerges sooner or later during the transitory dynamics: except in the case of a very high dematerialization potential of final output, the rent share will rise as quantitative growth slows down,